Mining Institutions

5. Mining authorities/agencies

As discussed earlier in this topic overview, some developing countries have separated out the licensing function from some other functions of the mining regulator. There are different models for how this can be achieved. When the licensing and monitoring functions are removed from the mining regulator’s other functions that are the responsibility of either a senior public servant such as a Permanent Secretary, or a Director General, a new reporting arrangement is created. Usually there is an Authority, Agency or Commission set up that has a Chief Operating Officer that reports to a Board of Directors.

Governments have different reasons for wanting to implement such a system. Some of these are the following:

Access to different salary scales when separated from the public service

Ability to self-fund or supplement government funding through retention of a portion of commercial fees related to mining activity

Independence from political influence in license allocation decision-making (The Chairman of the Commission is elected by members of the Board who are drawn from a mix of private sector and government representatives)

Reduction in conflict of interest (separation of policy makers from policy implementers, for example)

Integration of industry concerns and views into the regulatory process (private sector membership on the Board of Directors)

This is a more business-like type of structure than that which would be found in mining administrations that are constructed as a government department. The CEO would report to the Chairman of the Board, but would still have some kind of relationship to the Minister charged with governance of the mining industry. An example of this set up would be the Minerals Commission in Ghana.

The Minerals Commission in Ghana was formed under the 1992 Constitution and the Minerals Commission Act as a government agency. It is responsible for “the regulation and management of the utilisation of the mineral resources of Ghana and the coordination and implementation of policies relating to mining. It also ensures compliance with Ghana's Mining and Mineral Laws and Regulation through effective monitoring.” In this model, the development and monitoring of mineral policy, laws and regulations would fall under the responsibility of the Ministry of Lands and Natural Resources.

Some other countries have adopted a similar model including Papua New Guinea, a major gold mining producing country.

The Mineral Resources Authority in Papua New Guinea was created in 2005. It has a managing director and reports to a Board of Directors. The MRA contains all functions previously located at the Ministry of Mining except the policy and statistics functions. There are advantages and disadvantages to these models. In Papua New Guinea, some mining related stakeholders have said that the two major functions: policy and regulation, should not be separated. There can be discontent within the ministry or department that has had its regulatory functions removed in favour of a more commercially run agency. Inevitably the salary rates will be different, and generally the offices of independent agencies are much more pleasant places to work because they have more funding to spend on creating a good working environment. More importantly, when there is little spirit of cooperation between the policy maker and the policy implementer, there can be delays in getting policies approved or resistance in carrying them out. However, the MRA is a very well-resourced and highly functioning organisation that appears to have benefited from the institutional structure.

The MRA includes the geological survey function. In comparison, Ghana has separated out the Geological Survey to be its own Agency, apart from the Minerals Commission. These are different ways that an Agency or an Authority can be structured.

The government of Tanzania has taken another approach to regulating its mining sector. While all the policy and licensing functions are under the Ministry of Mines and Energy, it has created a separate monitoring body to undertake audits of mining operations. In 2009, it formed the Tanzania Minerals Audit Agency. This institution was set up as a response to the country’s concern that gold mining companies were not declaring the full amount or value of their production, and the country was losing mineral revenue.

The TMAA’s mission is to conduct financial and environmental audits as well as auditing of quality and quantity of minerals produced and exported by miners in order to maximize benefits to the Government from the mining industry for sustainable development of the country.

These examples illustrate how government has created mining agencies or authorities to respond to particular policy objectives. However, by far the more common model for mining administration is one where all functions are integrated in a mining department or ministry. All functions are included in one organisation. This institution falls under the responsibility of a senior public servant, and this official reports directly to a Deputy Minister or a Minister of Mines. Most developed country mining jurisdictions such as Australia, Canada, and the United States follow this type of model. Many of the reasons that some developing countries pursue the agency or authority model do not always apply in the developed world:

Professional salaries for mining staff are usually comparable with those offered by the mining sector so there is little danger of attraction or retention of staff

Governments usually have sufficient funding to provide good infrastructure and systems

There are sufficient governance checks and balances built into the system to discourage political interference

There is sufficient capacity to ensure there is no conflict of interest between the policy makers and the policy implementers

There is no need to provide a platform for integrating industry concerns into the business of the mining administrator as there are usually well-functioning industry advisory forums set up to ensure this interface